Household consumers in northern Moldova reduce their energy consumption by up to 22%, as part of a behavioral experiment

In the last two years, the Republic of Moldova has become the country most affected by the energy crisis, after Ukraine. Last year, over 60% of the country’s population paid over 10% of family income for energy resources, thus being affected by energy poverty. Combined with inflation of over 30%, all these exposed over a quarter of the population to poverty (living with less than US$1.50/day).

The Government of the Republic of Moldova, with support of development partners, allocated record amounts for covering compensations of the thermal energy, electricity, and natural gas bills. This winter alone, the Energy Poverty Reduction Fund, set up with the support of the European Union, the Slovak Government and UNDP, amounts to 5 billion lei. Without this support, the number of people living in energy poverty would have been much higher.

However, subsidizing permanently energy bills is not feasible in the long run and therefore the EU and UNDP supports efforts to reduce energy consumption and expenditures, respectively.

How can we reduce energy consumption and, respectively, the costs burdening people?

One of the mechanisms put into practice by UNDP, with the support of the EU, is a behavioral experiment, through which households with above-average energy consumption were informed about their excess consumption, about the most accessible ways to save energy and were encouraged to improve consumption habits. After similar letters were sent to consumers in the center and south of the country in the spring of last year, between June and November 2022 over 140 thousand household consumers in the north of the country, clients of FEE Nord electric utility company, received behavioral letters. More, the bills were adjusted to capture more useful information for reducing consumption.

The monthly consumption of households that received letters was compared with similar data of those that did not receive letters in the respective month. The purpose of this experiment was to confirm that households that receive behavioral letters decrease their consumption, compared to households that do not receive such letters, because there was an increase in the price of electricity in that month and the impact of tariff increases on behavior had to be excluded.

Savings grow with bill amount

The experiment demonstrated that households can be positively influenced by behavioral letters, with most managing to reduce their consumption by as much as 22%, after receiving the letters.

The method of behavioral letters proved to have a notable effect on households that consume more energy (over 200kWh/month), being the most motivated, through letters, to reduce electricity consumption. At the same time, households with an average consumption (below 200kWh/month) were less sensitive to this tool, saving between 2 and 8% of electricity.

The greatest impact of motivational letters was observed in the first three months (10-20%), after that the savings decreased below 10% and, in some cases, even were contained.

The behavioral experiment was conducted in the framework of the “Addressing the impacts of the energy crisis in the Republic of Moldova” programme, financed by the European Union and implemented by UNDP Moldova.

With a budget of 10 million euros allocated by the European Union, the “Addressing the impacts of the energy crisis in the Republic of Moldova” programme supported the creation of the compensatii.gov.md platform and will launch a programme to replace old household appliances with new and energy efficient ones, will fund the installation of photovoltaic panels in households and a few hospitals, as well as the change of central heating systems in several blocks of flats with more efficient horizontal distribution systems.

In addition, the programme provides support for the transposition of the EU’s Third Energy Package into both primary and secondary legislation, as well as the transposition of a number of Directives and Regulations of the Clean Energy for All Europeans package, which address the energy performance of buildings, renewable energy sources, energy efficiency, good governance and electricity market design.

The way forward

The authors of the behavioral experiment recommend sending motivational letters twice a year to households with the highest consumption.

The households are to be selected based on the consumption analysis of the last six months and the letters are to be sent by email, to reduce costs.

Outreach letters may be more effective if they provide case studies. Thus, the authors of the experiment recommend the use of real examples, which describe the investments made by a certain person, the monthly savings, and the return of investment. The emails need to include links to useful websites, so that households receiving the letters can learn more about the possible savings. At the same time, it is important that the Government guarantees or partially subsidizes the interest rate for loans subcontracted by households for investments aimed at reducing energy consumption.

It is also recommended to create a one-stop information desk to guide households that want to reduce their energy consumption. No need for office and public servants. It could be a site with information, useful external links, and an online chat.

Replication of Robert Cialdini’s experiment

The behavioral experiment largely repeats the results obtained by the psychologist and author of business books Robert Cialdini. After identifying simple actions that lead to reduced energy consumption, he defined four sets of messages, targeting:

• environmental protection (protects the environment, conserving energy);
• social responsibility (contributes to energy conservation for future generations);
• self-interest (saves money by conserving energy);
• descriptive norms (do like your neighbors who consume less energy).

At the end of the experiment, it was concluded that three out of four groups of consumers spent even more energy in the following period, except for those who were encouraged to follow their neighbors with lower consumption.